Coronavirus destroys real estate market of Cyprus
According to experts the coronavirus pandemic raging around the world will hit the real estate market of Cyprus. It is expected that due to the crisis, investors will stop investing into residential and commercial properties of the island state, so number of sale and purchase transactions in the industry will be reduced greatly. Based on the most optimistic analysts’ forecasts, stagnation will last 2 months. If the situation won’t stabilize in the near future, stagnation will drag on until the summer, inclusively.
Real estate experts are sounding the alarm
Nikolas Ioannou, analyst at Danos / BNPRE Groups suggests that if worse comes, the Cyprus real estate market will slow down to a complete halt. The situation may be heightening by the virus spread throughout the island, since now there is an official evidence of the first confirmed infected with COVID-19.
The expert predicts a rapid collapse of the real estate market in the republic, which has not yet recovered from alterations made in the Citizenship for investments program. Let’s recall that in 2019 the Government of Cyprus reduced the number of citizenship applications to 700 per year, in the Parliament they even demanded to completely freeze the program — all this led to the fact that market activity continues to fall from the beginning of 2020.
- Early in the current year only 30% of 742 sold properties were purchased by the non -EU-residents;
- number of transactions involving non-EU residents decreased by 20%;
- the lion’s share of real estate remains non-demanded;
- an increase in offer is expected over the next couple of months;
- thousands of properties were seized by banking institutions for loan debts — dangerously serious competition for non-demanded properties in Cyprus.
Rental, luxury sector — everyone will suffer
Nikolas Ioannou believes that with the expansion of the coronavirus pandemic, thousands of rental properties will be empty due to lack of demand — under the influence of panic and widespread quarantines, people are already canceling reservations around the world. On the other hand, such circle will reduce rental rates, making rental housing more attractive — because landlords will adjust prices, trying to rent out housing for a long time.
George Mouskides (Chairman of the Cyprus Association of Real Estate Owners) suggests that the luxury segment of residential real estate in Cyprus will also be seriously affected by the pandemic, sales will be down for sure. After all, foreign investors won’t be able to visit the country for personal viewing of luxury housing, and nobody buys real estate of premium segment by photographs. As a result, many transactions will be postponed for an indefinite period of time.
According to George Mouskides’ forecasts, if the spread of COVID-19 in Cyprus is timely jugulate by the authorities, the real estate market will stop for no more than 8 weeks. If the scales of the disaster continue to grow exponentially, the crisis in the real estate market will cover the summer season.
How the authorities solve the issue
The Government of Cyprus, in order to combat the consequences of the coronavirus pandemic, proposes to revise the naturalization process by reducing the time period for consideration of applications for citizenship under the Investment Program. Thus, the Cypriot authorities hope to compensate for the economic recession out of the funds received from applicants for citizenship.
So far, only 1.2% of the island state’s GDP is associated with the naturalization program. However, since 2013, investment citizenship has brought about € 6.6 billion into the Cyprus economy; therefore such direction of anti-crisis measures can bear fruit.
Based on materials: Prian